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Buy your own kingdom - it's the ultimate 'I have arrived' statement
Private islands are increasingly the pre-eminent prize property for wealthy buyers seeking privacy and prestige
12 Feb
TALK about the ideal gated community - except that the gate is the surrounding waters.
Private islands account for a sliver of the real estate market, but they are increasingly the pre-eminent prize property for wealthy buyers seeking privacy and prestige.
Those were the findings of the latest Candy GPS Report, which focused on the island real estate buying habits of high-net-worth individuals around the world - those with more than US$30 million in assets. It ranked the top 20 island areas for real estate investment, including private islands.
Bermuda ranked first, and the Bahamas, British Virgin Islands and Antigua all appear in the top five, largely because of their proximity to the US mainland, climate and favourable business environments, according to the report.
The east and west coasts of Florida landed in the top 10 of the ranking, issued last fall by Savills, a global real estate adviser, and Candy & Candy, a design firm, along with Deutsche Asset & Wealth Management.
"Owning an island is romantic, sexy - it's the ultimate 'I've arrived' statement," said Kathleen Peddicord, publisher of the newsletter Live and Invest Overseas and author of How to Buy Real Estate Overseas. Buyers eager to make that claim are likely to be on the rise, joining the ranks of well-known island owners such as Lawrence Ellison, Richard Branson and David Copperfield.
"The last 10 years were the decade of prime urban property investment," said Yolande Barnes, director of world research at Savills. "The next 10 years will see a growing appetite for island real estate investment and lifestyle." She added: "For the world's wealthy, the pinnacle of achievement is to own what is exclusive and rare, so an island property goes hand in hand with a luxury apartment in a prime city."
The global population of those with more than US$30 million in assets reached nearly 200,000 in 2013 and is forecast to grow 22 per cent by 2018, according to Savills, which will fuel demand for extraordinary real estate, Ms Barnes said.
"The largest group of buyers are those who have made a lot of money and want to have a private island which is practical, and they can share with their family and friends," said Charles Weston-Baker, director of the international residential department at Savills in London. It is about "having your own kingdom."
Exclusivity is part of the draw. "There are just 2,000 really quality islands around the world," said Farhad Vladi, president of Vladi Private Islands, a private island broker who has been in the business for over four decades.
"Quality islands are the ones near the mainland, in regions of political stability, with development permits, the potential to add services and infrastructure and with security of ownership," he said.
Potential purchasers must make sure that they are buying a freehold title, granting ownership of the land, and not a leasehold, Mr Vladi said.
A permit to build is also a prerequisite. And for many buyers, knowing that a doctor is no more than 90 minutes away is crucial, he said.
The upshot of those conditions is limited supply. Mr Vladi estimated that 500 islands are on the market. Most cost from US$1 million to US$10 million.
"A few places can command US$60 million, but US$30 million is generally the ceiling, unless it's a unique situation," Mr Vladi said.
Most sales are under US$5 million, said Chris Krolow, chief executive of Private Islands, a Toronto-based company that buys, sells and rents private island real estate around the world through its website, newsletter and magazine. "On a good day, we get about 100 inquiries from potential island buyers, but you can weed them out pretty quickly," he said.
"Most people who want an island are avid boaters," Mr Krolow said. "One of my first questions to a prospective buyer is, 'What kind of boat do you have?' If they don't have a boat, it's unlikely they will wind up a buyer."
Those who do move ahead usually have "a tie to that region already", he added. "They've boated around and seen the island. They're looking for something away from the mainland that they can show off to their friends, and they want to have a sweet guesthouse with a beautiful view."
The good news for buyers: In the quality island market, prices fell during the global financial crisis when discretionary purchases of all types were curbed, according to the Candy report.
In some core markets, prices have yet to recover from their pre-recession highs.
The 43-acre Buck Island, off the south-east corner of Tortola in the British Virgin Islands, is listed at US$25 million. It was priced at US$50 million a few years ago. It is a freehold private island estate, which can accommodate more than 20 people in its main house and two guest cottages. It has a protected bay, allowing yachts up to 200 feet long to anchor safely, and a helipad is handy for guests arriving by private helicopters. NYT
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